12-01-2018 Dax Technical Analysis

Hello traders.

It seems Seehofer, Schultz and Merkel have been busy busy busy. If I’ve understand things right: The SPD wants money, the CSU expects refugees. The SPD wants to buy their voters and the CSU wants to protect their clientele from the effects of global poverty migration? And even if a deal is made, there will still be talks on the 21st. So it’s getting interesting in Germany at the moment. In other European news, just around the corner, we have the Italian elections (early March I think) and I’m not sure how many of the candidates are pro-EU either. Perhaps they could be next to follow Brexit? At least Greece are back under control, Tsipras has been a good boy and played ball to undertake reforms, so Grexit seems unlikely for now.

However, across the Atlantic, the stock markets continue to move in one direction and break record after record. Mania has set in. So when does the Dax catch up? After the elections, probably.

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12-01-2018 Dax Charts

Bearish Idea

We remain bearish below 13300 and the minor swings are fairly clear.

If we look back to EP5, you will see an ignition point just under the blue dashed line [1] (to the right of EP5) and this was coupled with the gap lower. The next two dashed blue lines mark out a low [2] and a lower high [3]. This forms the basis of a trend.

If this move lower continues, then the targets to the downside are the shaded box somewhere between 13061-13100. Wider bearish targets suggest a deeper correction and a break below 13000.

Bullish Idea

I am not much of a fibonacci trader and I don’t pay much attention to it normally, but if I did, I wonder how much importance I would place on the 38.2 (of the recent bullish swing). When we add the bullish divergence to the picture, it’s more positive. Also the fact that we have just tagged the 240m median line from above (a tenet of Alan Andrew’s work – price will often zoom a median line and then come back to test it on the way to the next one) can not be ignored either. In fact with the global indices rallying, you would expect the German market to do the same.

I expect this to be the case and I think we are merely experiencing a dip, which will be bought. Choosing the exact level which it turns is not easy.

12-01-2018 Dax Levels

POC *13219
Value Area High *13264
Value Area Low *13159
14 Day ATR130.46
200 EMA12594
Daily R213386
Daily R113315
Daily Pivot13231
Daily S113160
Daily S213076
*These are FXCM numbers, not futures numbers. Please be aware that FXCM can often be 5-10 points higher than futures prices


One thought on “12-01-2018 Dax Technical Analysis”

  1. paul@carusouk.com

    Great work as always – simple, concise and without undue bias. Wise to have a perspective on both sides of the bull/bear argument when trading……helps us avoid confirmation bias

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